Blockchain is the future – or, it has been since it first made waves in the first decade of the new millennium.
Blockchain is ill-understood by many, but remains one of the most active sub-industries in the tech sector, and promises foundational shifts in the makeup of international business, trade and industry.
The UK is a hub for blockchain, as well as for cryptocurrency – the digital currencies and assets built on blockchain. With investment high and the future bright, it is only right that businesses look for their own routes to incorporate blockchain into their infrastructure. But what exactly is this technology, and how can it be of use?
Understanding Blockchain Technology
Blockchain technology is, in essence, the building blocks of a decentralised peer-to-peer network. It is a node-based system, whereby information can be recorded and shared immutably; it is a shared ledger of calculations and activity, which cannot be altered or affected, and which can be used in a variety of unique and interesting ways.
One of the more public-facing applications of blockchain is in cryptocurrency, where the technology forms the basis of the currency itself. The blockchain enables the transfer of digital assets peer-to-peer, with no central arbiter or coordinator. As such, unique digital items with tangible value can be transferred via blockchain, which records ownership immutably. There are other uses, too, which utilise the high levels of security and efficiency well – including the signage and sending of confidential data or agreements via smart contracts.
Cryptocurrency Investments
We’ve touched on cryptocurrency already, but there is a whole world within cryptocurrency and investment for both businesses and individuals to potentially benefit from. Bitcoin is one of the first cryptocurrencies, and remains one of the biggest success stories in the space; it was designed to be a digital mirror for gold, being finite and harder to ‘mine’ as more hits the market. However, its unstable value and stratospheric long-term growth has illustrated the potential of decentralised currency – albeit with high risk for early-days investors.
Navigating the Decentralised Finance (DeFi) Ecosystem
The wider financial sector is being disrupted by blockchain technology, beyond the mere existence of digital currencies and assets. Decentralised Finance, or DeFi, describes this new corner of the industry, and encompasses everything from smart contracts to entire decentralised exchanges. Navigating this new ecosystem requires some legal understanding and advice, in order not to contravene international tax laws or financial regulations. However, within decentralised exchanges, the limits are few – and entirely new financial relationships are being created.
